Peterson: WTO case will change cotton legislation

Brazil and the World Trade Organization[2] are dealing with a situation that bears little resemblance to real world conditions in the cotton market[3], Collin Peterson, chairman of the House Ag Committee, said during a farm bill field hearing in Lubbock, Texas.

Peterson, commenting on the negotiations currently under way with Brazil to prevent retaliatory measures allowed by the WTO ruling against the U.S. Cotton program, said the issue is based on situations that existed under previous farm bills. “It’s about past history,” he said. “Brazil is suing you over past history.”

He also said future trade negotiations that don’t include ag will not fly. “We will not live with it if agriculture is not (treated fairly). Without agriculture they will not get a deal.”

He quipped that the only way U.S. agriculture could get a fair deal from the WTO was “to figure out a way to become a developing nation.”

He said the next farm bill likely would include changes for cotton because of the WTO/Brazil case. “We’ll have to do something but I’m not certain what. We’re not sure what Brazil wants, but we will have to change. My interest is to protect the safety net for production agriculture so that it works for the producer.”

Brad Heffington, a cotton producer from Lamb County, Texas, said the WTO/Brazil cotton case complicates discussions about the cotton program. “It’s a complex program and the case was filed under two previous farm bills. Cotton acreage has decreased by about half since the case was first filed. We don’t know what they want.

“Now, we have a foreign country dictating to our Congress what our laws should be. I don’t believe cotton was ever the main issue, but other goods. I’m at a loss as to what we should do.”

Representative Mike Rogers, R-Alabama, asked Doyle Schniers, a cotton grower from San Angelo, Texas, what effect trade agreements and the loss of the domestic textile industry have had on cotton markets.

“Our primary markets now are Asian,” Schniers said. “We are producing high quality cotton in Texas and that’s what Asian markets want.”

Rogers said trade agreements are as important to cotton as they are for rice and wheat. “It’s important that we keep the markets we have now.”

L.G. Raun, a rice producer from El Campo, Texas, testified that rice has not been well represented in past trade agreements. “Rice was completely excluded from the free trade agreement with South Korea, foreclosing any new markets for U.S. rice producers in that country,” he said.

Raun said the Columbia Free Trade agreement would “provide significant new market access for the Mid-South rice industry. But it is stalled.”

He said the Doha Round of negotiations of the WTO concerns producers. “We have seen nothing in the Doha Round negotiations (that would change U.S. producers’ disadvantage with foreign subsidies and tariffs). In fact, in many ways Doha would make matters worse.”

He said trade agreements that phase in market access over many years but reduce the farm safety net immediately, are not fair trade and make no economic sense. “They don’t cash flow at the bank.”

Panelists also encouraged the committee to support a trade agreement with Cuba. Panelist David Cleavinger, a wheat, corn, cotton and grain sorghum producer from Wildorado, Texas, said a Cuban trade deal would mean an $18 million annual economic benefit to Texas. Raun said Cuba was once “the No. 1 export market for U.S. rice. We believe it is potentially a 400,000 to 600,000-ton market if normal commercial relations are established. We wish to commend Chairman Peterson and Congressman (Jerry) Moran (Kansas) for your leadership in introducing legislation to open agricultural trade as well as remove travel restrictions to Cuba.”

Other panelists also expressed support for efforts to increase agricultural trade. “We support international trade policies that aggressively pursue expanded market access for U.S. beef, enforce trade agreements that are based on internationally recognized standards and guidelines and hold our trading partners accountable for international trade agreements,” said Joe Parker, Texas and Southwestern Cattle Raisers Association.

Peterson said the Obama Administration is “moving forward,” with efforts to open livestock markets in Japan, Korea and Russia. “The Administration has been as proactive as possible,” on the issue, he said.

Cleavinger said swift approval of the Columbia Free Trade Agreement is critical for wheat producers. “The United States once boasted maintaining roughly 85 percent of the Columbian market,” he said. “Estimates now show that our share could fall as low as 30 percent if Canada, one of our leading competitors, approves a free trade agreement before the United States. That is unacceptable.”

Dan Smith, speaking for the national Sorghum Producers, said trade “is vital to our marketplace since 38 percent of U.S. grain sorghum is exported to Mexico, Japan, the European Union and other markets.”

Other speakers urged the committee to maintain proven international marketing programs. “It is important for the United States to increase our share of markets,” said Dee Vaughan, a corn grower from Dumas, Texas. “Market Access Program and Foreign Market Development funds help producer groups and others build and maintain markets. It is important that adequate funding be available through the farm bill.”

He said the Corn Producers Association of Texas supports bi-lateral trade agreements pending for Panama, South Korea, and Columbia, but “has strong reservations about the U.S. offer to the WTO within the Doha Round of negotiations.”

He said the language in the proposal is so ambiguous that it will make it difficult to create a commodity program that would be unchallenged by foreign competitors.

Panelists conceded that WTO rulings would affect the 2012 farm bill debate. “We encourage the committee to give careful consideration to trade matters that might result in increased exports of farm commodities and specifically support the Market Access Program and the Foreign Market Development Fund,” said Billy Bob Brown, testifying for the Texas Farm Bureau.